Westchester Medical Takes Majority Ownership of NY's Bon Secours Charity Health

Under the joint venture finalized this week, WMC has taken 60% ownership and controls day-to-day operations of Bon Secours Charity Health.

Valhalla, NY-based Westchester Medical Center has assumed majority ownership of Bon Secours Charity Health System, a three-hospital health system north of New York City.

Under the joint venture finalized this week, WMC has taken 60% ownership of the system and controls day-to-day operations. Marriottsville, MD-based corporate parent Bon Secours Health System has retained 40% interest. The Sisters of Charity of St. Elizabeth, which has co-sponsored Bon Secours Charity Health System since 2000, will remain canonical cosponsors of the system, but will not retain a financial stake.

The three hospitals in Bon Secours Charity Health System: Good Samaritan Hospital in Suffern, St. Anthony Community Hospital in Warwick, and Bon Secours Community Hospital in Port Jervis, will keep their names and remain Catholic providers.

Michael D. Israel, president and CEO of Westchester Medical Center, declined to attach a dollar figure to the value of the deal when he spokes with HealthLeaders Media.

"It's a very complicated deal. It is not a straight purchase," Israel says. "The only thing I can tell you is that Bon Secours Charity Health System issued the other day $122 million in bonds. If for some reason that entity cannot pay the debt service, we have guaranteed the yearly debt service, so the $122 million was issued by Bon Secours Charity using our credit rating."

WMC has three hospitals on its main campus: a 415-bed adult hospital, a 136-bed children's hospital, and a 101-bed behavioral health center. Israel says the joint venture allows WMC to "better fulfill our mission, which is to keep this campus an advanced care campus and continue to work with community hospitals, these ones we happen to have an ownership interest in."

"Our traditional model here has been working with community hospitals in the region. We don't do primary and secondary care here. We only do tertiary and quaternary care," he says. "We have, if not the highest, one of the highest case mix indexes in the U.S. given that we don't do primary and secondary. We are to a large extent a receiving hospital. We do 24,000 to 25,000 admissions a year and we have more than 7,000 transfers. That's about 20 a day… Bottom line is we are the tertiary referral center in the Hudson Valley."

"It also allows us to better develop tertiary services that are closer to where people live," he says. "We believe the relationship we have, both the ownership and the management of the Bon Secours Charity Health, will allow us to expand our reach and to work with them to expand services and improve service delivery to the communities they serve. We are just reacting to the changes in the healthcare system the way everybody else is."

With the majority stake, Israel says WMC's service area now includes about three million people living in eight counties in the Hudson Valley.

Last year, WMC purchased the financially struggling St. Francis Hospital in Poughkeepsie and placed it under WMC license as a second campus 53 miles to the north.

"Three years ago, every community hospital in the region was independent," Israel says. "Within the next three years there will be no independent community hospitals in the region. They will be either owned or affiliated by larger systems. What is happening nationally is happening in New York in a very compacted period of time. So, we obviously have to change with the changing times."

Israel says WMC's three Valhalla hospitals are operating at near capacity, so gaining more regional referrals is not a primary driver in the joint venture.

"We're really not focused on the traditional development of branches to refer patients in here," he says. "One of the purposes of the relationship with Bon Secours is the development of more and better services in Rockland and Orange Counties. Of course, the high-end tertiary and quaternary cases that they can't do there, we obviously would like to see those cases come here. But the goal of this is not strictly 'let's go out and control some community hospitals so we can shift the high-end business here.' That is not what we are about."